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IR35 - Which Way Now?

OnTax Accountants Dunfermline Take A Fresh Look At IR35
The Rules Have Changed Again!

IR35 - Which Way Now?

We Are Accountants Dunfermline Business Love!

OnTax Accountants Dunfermline are often asked by IR35 contractors where taxes go. Truth is it's a little bit of an eternal mystery however the principle is that this money is used to run the UK. Without levying taxes the UK cannot finance itself. So it is of utmost importance that taxes are levied. OnTax Accountants Dunfermline has seen many cases of these taxes being punishing and making the lives of UK citizens miserable.

But basic taxes must be levied, for example income tax, property tax. OnTax Accountants Dunfermline is of view that income tax contributes a lot to the UK's revenue and in theory this is a good thing, provided it is properly used. But just as there is Government mis-spending (which we are all highly critical of) so too the government is taking steps to make sure that they receive tax from the UK citizens. Hence we see that there are many measures to prevent income tax evasion. IR35 is one such precaution taken to prevent income tax evasion.

At times we see that intermediaries are used to make payments from employer to client. This creates “disguised employment”; the disguised employees evade income taxes. We at OnTax Accountants Dunfermline can reveal that to put an end to this IR35 has come into existence. Although IR35 is a much criticized move, we see that it has been quite effective when it comes to ensuring proper tax payments. OnTax Accountants Dunfermline discovered that the number of companies that have been taxed under IR35 goes to show how extensively tax evasion was prevalent. IR35 has come down heavily making tax payments much stricter. This has brought in a large amount of revenue. This shows the success of IR35. The mention of IR35 in the 2013 Budget was a necessary one. A few changes have been made in the law but the outline of IR35 remains the same.

Options On IR35

IR35 was more or less able to prevent “disguised employment” and prevent tax evasion. Yet we see that IR35 has not met the expectation of its framers. OnTax Accountants Dunfermline believes that the amount of revenue collected was high but nowhere near to what was estimated.

To take care of these issues there is a probable amendment in store for the IR35 bill. OnTax Accountants Dunfermline is of the view that re-considering IR35 is a necessary move since it has taken UK one step closer to eradicating tax evasion. The new and improved law is set to be harsher and more extensive, hence being more effective.

IR35 has Confused Even The Best Accountants...Surprised?

Know The IR35 Guidelines

The biggest question faced by the law is- Who does it apply to? The answer to that is a difficult one. All “office holders” are liable to pay tax as per the IR35. OnTax however thinks that different government agencies take different things into consideration. So there is a problem regarding the phrase “office holding”. The guidelines of IR35 hold the answer but they are not very clear to a layman. OnTax Accountants Dunfermline believes that so there are many cases where the applicability of IR35 has been challenged that it is worth getting your contact externally appraised. Irrespective of the problems present in IR35 we can observe that it has been a success when it comes to preventing tax evasion.

So the question relating to the 2013 budget is, "what is an office holder"? HMRC define it here. Interestingly that is a definition according to tax law but there is not a statutory definition of "office holder". So in the eyes of the law there is still no clear cut case, just lots of room for doubt and creative arguments! Some feel that Limited Company contracting is dead, others not. The interesting point is that these opinions change the closer you get to the contractors money ending up in the opinion holders pockets! Will this new bill work though? our opinion is that IR35 specialists will now look at ways to ensure the contractors are not "office holders" thus making this new legislation not as effective as it might have seemed at first.